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President Signs Expanded Iran Sanctions Bill that Includes Additional Disclosure Requirements
Practical Law Legal Update 6-520-9082 (Approx. 3 pages)
President Signs Expanded Iran Sanctions Bill that Includes Additional Disclosure Requirements
by PLC Corporate & Securities
| Published on 14 Aug 2012 • USA (National/Federal) |
President Obama signed the Iran Threat Reduction and Syria Human Rights Act of 2012 (HR 1905) into law. This Act expands sanctions against Iran and Syria and includes a provision requiring companies to disclose any activities that are sanctionable.
On August 10, 2012, President Obama signed the Iran Threat Reduction and Syria Human Rights Act of 2012 (the Act) into law. The Act expands the types of transactions and other activities with Iran and Syria that are subject to sanctions and holds US entities liable for any of these transactions and activities undertaken by their foreign subsidiaries.
In particular, the Act includes a provision relating to public disclosure of any Iran-related transactions or activities that are sanctionable.
Who Must Disclose Information under the Act?
Under Section 219 of the Act, any company that files periodic reports under Section 13(a) of the Exchange Act must include additional disclosure in its reports if it did any of the following:
- Engaged in any activity described in Section 5(a) or (b) of the Iran Sanctions Act of 1996 (relating to Iranian petroleum resources and refined petroleum products and development of Iranian weapons of mass destruction).
- Engaged in any activity or transaction described in Section 104(c)(2) or 104(d)(1), respectively, of the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (CISADA) (relating to Iranian financial services transactions and transactions with the Iranian Revolutionary Guard Corps or any of its agents or affiliates).
- Engaged in any activity described in Section 105A(b)(2) of CISADA.
- Conducted any transaction with any person:
- whose property or interests in property are blocked under Executive Orders Nos. 13224 (persons who commit, threaten to commit or support terrorism) or 13382 (persons who support the proliferation of weapons of mass destruction); or
- that falls within the definition of the government of Iran under Office of Foreign Assets Control Regulations (31 C.F.R. § 560.304).
What Information Must Be Disclosed?
Any company that took any of these actions must disclose in each periodic report, for each action taken during the period:
- The nature and extent of the activity.
- The gross revenues and net profits attributable to the activity.
- Whether it intends to continue the activity.
Other Required Disclosure
In addition to public disclosure in its periodic reports, the company must also file with the SEC a separate report that includes this information. The SEC will then:
- Post this report on its website.
- Send the report to the President, as well as the House Committees on Foreign Affairs and Financial Services and the Senate Committees on Foreign Relations and Banking, Housing and Urban Affairs. The President will then investigate whether sanctions should be imposed on the company.
Effective Date
Section 219 of the Act takes effect 180 days after the date the Act was enacted, which is February 6, 2013.
Companies must consider whether this additional disclosure is required for their periodic reports beginning with the first report filed after February 6, 2013.